Last week, I hypothecated that the government, as unauthorized by the Constitution, has become a huge insurance scam, which is actuarially unsound from the word go. The insurance “coverage,” which is compulsory, grows as each day passes. This coverage, draws down the currency, due to huge deficits. Now, we are engaged in a bottomless pit in Iraq and Afghanistan, which will draw the dollar down even further, causing all prices to escalate.
What is missing in all this compulsory insurance coverage? Is everything insured? Is everyone protected? Just about except what is most important to insure, and that is the dollar. Where is the dollar insurance? Where is the protection against devaluing dollars, which we all are forced to use for trade? The workplace is government-insured, as are crops, and unemployment, among a hundred others. Where is the dollar insurance? What is the remedy for the falling dollar, which makes saving in them absurd? (The FDIC has a couple of cents set aside for each hundred dollars it insures.)
When we become sick, we need a remedy, right? Remedies, consist of lots of things for lots of problems, such as fixing a flat tire, painting the house, washing the dishes, going to the doctor, calling the repairman for any of several appliances which may break, fixing a leaky roof, or lots of remedies, when trouble occurs.
Remedies change over time, and the old time medical remedies were hilarious, if considered today. From page 188 of a 1943 book titled “Here They Dug The Gold,” the following is in Leadville Colorado, in 1878.
Two lady barbers from Chicago had established a shop on Chestnut Street, and above them Dr. Mary Barker-Bates was treating nervous disorders in an electric chair equipped with a “$300 Galvanic Faradic battery, a wonderful and very beautiful piece of mechanism.” Down the street was the office of a most versatile quack, Dr. Charles Broadbent – phrenologist, mesmerist, medicine man, and temperance lecturer. By examining the head -“examination $2, and with chart, $3,” he could, “tell you what kind of a lady or gentleman you should marry, and whether you are long-lived or not.” His remedies included Inhaling Balm for catarrh, Dandelion Pills for dyspepsia and biliousness, Nephriticum for kidney and bladder complaints, and nothing equaled his Great English Remedy, “for Loss of Memory, Lassitude, Nocturnal Emissions, Noises in the Head, Dimness of Vision, and Aversion to Society.”
Nice remedies, Huh? No wonder the life expectancy was low. (I love Colorado and its history) While this is funny, and especially in retrospect, let’s get down to more serious business, which is the state of the US economy. It seems as though nothing works, and all remedies tried, only make it worse, and the dollar go lower. What can the US government, Treasury, Federal Reserve, or any of the bureaucrats in D.C. do? There is only one remedy they have come up with, and that is to print more dollars.
The problem is enormous for the government anyway as well as those who save in government’s dollars. If the dollar goes low, everyone will sell their debt, which they have bought. At the same time, a low value dollar makes foreign exports easier. High value dollars, makes people buy our debt, and they in turn export to us. Either way it is a disaster, and a fine line must be held, to keep the whole thing afloat, and the public fooled. If the public ceases being fooled with the ’recovery,’ while millions are unemployed and no dividend stocks flourish, they will sell their over-priced stocks, and the stock market will crash. If they keep buying, it will make the eventual crash all the more severe, and more will lose their life savings.
All of this will eventually happen, with hyper-inflation, and gold and silver going through the roof. No question about it. I’ve staked my future on it. My net worth, aside from home, etc, is in gold and silver, plus other tangibles. I do practice what I preach. Is real estate, the wonderful investment it has been in the past? Absolutely not, and Summit County Colorado, with the town of Vail in it, is a preview of what’s coming. A client of mine is familiar with it, and he mentions a ski-in, ski-out condo which was listed for $680,000 a year ago. It was reduced to $380,000 a few months ago, and still hasn’t sold.
Using interest as a remedy, is no solution either. After 13 interest cuts, no interest car deals, and low interest home mortgages, the economy is stalled. If debt is to be attractive to foreign buyers, it must have higher interest. (We MUST sell the overpowering debt, or the economy will crash.) If interest rates are raised, the housing bubble might collapse more quickly. What’s a government to do, now that it has gotten itself into such a fix? It is trillions of dollars in debt, owes more than all other nations combined. Its citizenry has equally huge debt. Bankruptcies are at all time highs, as are credit card failures. The war costs more each day, and the actuarially unsound, compulsory, insurance schemes, coast more each day also. Manufacturing has gone overseas and to Mexico. White collar jobs are going to India, and housing and stocks are over-priced. The Social Security “trust fund,” hasn’t a single silver quarter in it, but it consists of notes from the government. Retirement funds for corporations and companies, are hundreds of billions behind in contributions and grossly underfunded. What will happen?
Ever watch an accident happen? Imagine you are standing on a street corner, waiting for the light to change, and you see a car or truck coming full speed at a line of cars waiting for the light. The driver is asleep, as in a Staten Island Ferry. You KNOW it isn’t going to be pleasant. You KNOW there will be a crash. You KNOW people will be hurt. But there is absolutely nothing you can do to stop it. You step back to protect yourself, and watch in horror, as events unfold. Isn’t that sort of like the pickle the US dollar and government are in now? You KNOW it is worthless, and increasing in numbers by the millions every day. Is there anything you can do to prevent the accident from happening? No. Is there anything you can do to make the dollar buy more, or decrease in numbers? No. Is there anything you can do to influence government in any way? No, because letters to Congress are never read, but are answered by a computer. Letters to the editor have never changed anything yet. Vote a certain way? Nope, as the majority are foolish, and the wrong people always seem to get elected. Sign petitions? Carry banners? Picket? They won’t change a thing.
How can the dollar be insured, like all the other items? The only way, would be for it to be backed by something other than, “The full Faith and Credit of the US Government.” How can the dollar and US economy be salvaged? Like the accident, you can only watch and step back and protect yourself. If the government stopped printing dollars, balanced its budget, disbanded a huge part of the bureaucracy, brought the soldiers home and stopped sending dollars to every pip squeak nation on earth…both might be saved. Ever hear of a truly honest politician, who would vote correctly for the above? I never have, and besides it would take 218 of them to do any good. I short, there is no insurance against eventual economic collapse, dollar devaluation, political chicanery, and an enormous accident happening sooner or later.
P.J. O’Rourke said, ” Giving money and power to government, is like giving whiskey and car keys to teenage boys.” Who gave government these things? No one. They just took it. I didn’t turn on the presses, and neither did you. All we can actually do, is step back, and watch the whole mess crumble, as in an accident about to happen. We can watch out for and protect ourselves and our loved ones, but are powerless to make behemoth government change its course, in even a microscopic way. We’re just insignificant observers. It is fortunate to be an observer, because we can indeed step back to avoid the flying debris. As Charles DeGaulle once said, “There can be no other criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality and which is eternally and universally accepted as the unalterable fiduciary value par excellence.” Protect yourself.